(Source: The Fool)
This Company Can Have $35k Sitting In Your Bank Account in Under 24 Hours
Borrowing money can be a stressful experience.
It can take a while before you actually have access to funds and you might have to put up some serious collateral in the process, especially with more traditional lenders. If you are in a bind and need immediate access to cash, you could take out a payday loan…but you then risk entering into a vicious cycle of debt and interest payments.
Thanks to a company out of Chicago, worthy borrowers now have a reasonable alternative: AVANT. A personal lending company founded in 2012 by Al Goldstein, John Sun, and Paul Zhang, Avant uses machine learning and advanced algorithms to provide loans to an underserved population in an extremely short turnaround time.
“Quickest Way For People To Get Access To Loans”
– Avant website
Avant lowers the barriers and costs of borrowing for those who would otherwise have a hard time finding a justifiable loan that could be delivered quickly. The company’s borrowers typically have annual household incomes of $50-60k and have credit scores in the 600-700 range. This puts them somewhere in between prime and subprime borrowers – a zone that many traditional lenders won’t touch without risk-adjusting far beyond what may be deserved. The company’s advanced algorithms and machine learning capabilities enable it to identify creditworthy borrowers with just a five-minute application. Avant determines eligibility and then offers fair, risk-adjusted rates without asking for any collateral obligation in return.
Loans are available for $2k up to $35k and payment terms are typically 24-60 months. Interest rates are fixed over the term of a loan and range from 9.95% to 35.99%, far less than APRs offered by payday lenders. Avant also offers a unique and generous late-fee forgiveness policy that eliminates any penalties incurred if borrowers meet the next three payments following a missed payment.
One of the company’s most impressive capabilities is that it is able to drop funds into borrower accounts as soon as the next business day. This kind of turnaround time is unheard of, especially for those who are viewed by more traditional lenders as “risky” borrowers. Despite creating a valuable alternative, some originally questioned whether or not potential borrowers would feel comfortable using Avant given that there is no face-to-face interaction with real people at any point throughout the process.
Jim Cramer posed this question to Avant’s CEO, Al Goldstein, on Mad Money to which he replied:
“Half of our volume is approved in real-time with no human interaction…it’s about getting that instant gratification of a great product in real-time.”
Avant’s numbers prove that borrowers want what the company is selling.
To date, Avant has loaned over $4B to more than 600k people in the U.S. and UK!
One Of The Fastest Growing Startups In Chicago’s History
Founded by former Enova colleagues, Al Goldstein, John Sun, and Paul Zhang, Avant had success written into its DNA.
Prior to starting Avant, CEO Goldstein founded and sold CashNet USA in just two years for $265M. He joined Sun and Paul in November 2012 after they completed Chicago’s Y Combinator program. Within three months, the trio had raised $1M in seed funding and went on to raise another $8M in a Series A round three months later.
In six years, the company has raised $1.8B over five funding rounds, a tremendous but necessary total given the nature of the business.
By the end of 2017, Avant was one of the Midwest’s fastest growing companies since Groupon and was valued at over $2B, just five years after its founding.
Opportunity Created By Information
This Untold story gives us a great example of how data can be used to create a new business opportunity within an existing space.
Avant has figured out a way to validate borrower worthiness using many sources of data to serve a population that has been traditionally viewed as risky. Now, people who need access to funds with reasonable interest rates without being “prime” borrowers can do so without taking out a payday loan or putting up collateral. AND, they can access funds within one business day.
It’s hard to beat that value proposition.
Dip deeply into your industry and see if there’s an underserved population that you can identify and serve now because of data you are able to unearth and analyze more effectively than your competitors using modern technology. Do this and you may find a new and rich opportunity!